Correlation Between Janus Short-term and Janus High-yield

Can any of the company-specific risk be diversified away by investing in both Janus Short-term and Janus High-yield at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Janus Short-term and Janus High-yield into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Janus Short Term Bond and Janus High Yield Fund, you can compare the effects of market volatilities on Janus Short-term and Janus High-yield and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Janus Short-term with a short position of Janus High-yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Janus Short-term and Janus High-yield.

Diversification Opportunities for Janus Short-term and Janus High-yield

0.58

Correlation Coefficient

Janus Short-term  Janus High-yield

Very weak diversification

The 3 months correlation between Janus and Janus is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Janus Short Term Bond and Janus High Yield Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus High Yield and Janus Short-term is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Janus Short Term Bond are associated (or correlated) with Janus High-yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus High Yield has no effect on the direction of Janus Short-term i.e., Janus Short-term and Janus High-yield go up and down completely randomly.

Pair Corralation between Janus Short-term and Janus High-yield

Assuming the 90 days horizon Janus Short Term Bond is expected to generate 0.85 times more return on investment than Janus High-yield. However, Janus Short Term Bond is 1.17 times less risky than Janus High-yield. It trades about -0.13 of its potential returns per unit of risk. Janus High Yield Fund is currently generating about -0.29 per unit of risk. If you would invest  289.00  in Janus Short Term Bond on October 6, 2024 and sell it today you would lose (1.00) from holding Janus Short Term Bond or give up 0.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Janus Short Term Bond  vs.  Janus High Yield Fund

Janus Short Term

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Janus Short Term Bond are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Janus Short-term is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Janus High Yield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Janus High Yield Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Janus High-yield is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Janus Short-term and Janus High-yield

The main advantage of trading using opposite Janus Short-term and Janus High-yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Janus Short-term position performs unexpectedly, Janus High-yield can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Janus High-yield will offset losses from the drop in Janus High-yield's long position.

The idea behind Janus Short Term Bond and Janus High Yield Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.